$Estee Lauder(EL)$ is scheduled to release its fiscal Q4 2025 earnings before the market opens on August 20, 2025.
Estée Lauder (EL), which is down over 80% from its peak of $350 to $69, is showing signs of a potential turnaround. Based on he 13F filing, we can see that despite its decline, it is the only remaining stock in Michael Burry’s 13F portfolio, and recent activity such as sizable January 2027 $110 call purchases and insider buying near current levels, these suggests renewed investor confidence.
Overall Revenue : Analysts are expecting a decline in both the top and bottom lines for Q4. The Zacks consensus estimate for revenue is approximately $3.4 billion, representing a drop of over 12% year-over-year.
Overall Earnings Per Share (EPS) : The consensus EPS is a very low $0.08 per share, an 87.5% decrease from the prior year. The market's reaction will largely depend on whether the company can exceed these low expectations.
EL owns a strong portfolio of globally recognized brands, many of which are still growing double digits in the U.S., underscoring enduring brand equity despite recent headwinds. The sharp decline since 2022 stems from demand shocks in China and travel retail, inventory overbuild, and a rigid cost structure exacerbated by underperforming legacy brands.
But we can see that the company have tried to pivot by rebalancing its channel mix away from travel retail, focusing on core brand execution, particularly La Mer, The Ordinary, and Le Labo and implementing margin recovery through the PRGP cost-cutting program.
FY2025 is expected to mark the trough, with a recovery from FY2026 onward driven by volume resurgence rather than further cuts.
Summary of The Estée Lauder Companies (EL) Fiscal Q3 2025 Earnings
The Estée Lauder Companies reported its Q3 2025 earnings on May 1, 2025, presenting a mixed picture. While the company exceeded analyst expectations on both the top and bottom lines, the results still reflected a challenging business environment, particularly in its key travel retail segment.
Financial Performance:
Revenue: Net sales were $3.55 billion, exceeding the consensus forecast of $3.52 billion. However, this still represented a 10% decrease year-over-year. Organic sales, a key metric, declined by 9%.
Earnings Per Share (EPS): The company reported adjusted EPS of $0.65, significantly beating the forecasted $0.31. This strong beat was attributed to disciplined expense management.
Profitability: Gross margin expanded to 75.0% from 71.9% in the prior-year period, a positive sign of operational efficiency. However, the operating margin contracted to 11.4% from 14.1% due to increased consumer-facing investments and sales volume deleverage from the travel retail decline.
Operational Highlights:
The company saw a significant 28% organic decline in its global travel retail business, a major headwind.
Despite this, Estée Lauder reported gaining prestige beauty market share in key markets like the U.S., China, and Japan, with sequential improvements in sales for its business excluding travel retail.
The company's Profit Recovery and Growth Plan (PRGP) continued to deliver benefits, particularly in improving gross margins and reducing non-consumer facing expenses.
Lessons Learned from the Guidance
The guidance and management commentary provided with the Q3 report offered key insights into the company's strategy and challenges.
Lesson 1: The Travel Retail Segment is a Major Drag, but a Turnaround is Expected. The most significant lesson is the profound negative impact of the global travel retail business on the company's overall performance. Management was transparent about the ongoing "double-digit sales decline" expected in this segment for Q4. However, they also expressed confidence in a "strategic reset" of this business and are "confident in returning to positive growth territory in fiscal twenty twenty six." This tells investors that the travel retail headwind is not going away immediately but is a solvable problem the company is actively addressing.
Lesson 2: Expense Management is Proving Effective. The massive EPS beat, despite the revenue decline, demonstrates that Estée Lauder is effectively managing costs through its PRGP. The company is striking a balance between reducing certain expenses and making strategic, high-ROI investments in consumer-facing areas. This shows a new discipline in how the company is operating, which is crucial for profitability even with a challenging sales environment.
Lesson 3: The Market is Focused on the Future, Not Just the Past. Despite the strong earnings beat, the stock initially slipped. This underscores a key lesson for investors: the market is forward-looking. The disappointing guidance for Q4 and the cautious commentary on the Chinese consumer and travel retail outweighed the better-than-expected past results. For the stock to see a sustained recovery, the company must provide clearer signs that the turnaround is taking hold and that a return to robust sales growth is on the horizon.
Analysis of The Estée Lauder Companies (EL) Q4 2025 Earnings
Estée Lauder has been navigating a challenging macroeconomic environment, particularly with ongoing softness in its global travel retail business and muted consumer demand in China. The Q4 report will provide a critical update on the company's progress in these areas.
Key Metrics to Watch
Global Travel Retail Performance: This is the most significant headwind for Estée Lauder. The company has previously guided for a "stronger double-digit sales decline" in this segment for Q4. Investors will be scrutinizing the actual results to see if the decline was in line with, or better than, these expectations. Any signs of stabilization or a less severe decline could be a positive catalyst.
Performance by Geography and Product Category:
Asia/Pacific: The performance in this region, particularly in China and Korea, is critical. Investors will be looking for signs of a return to growth, or at least a moderation in the sales decline.
Americas: Analysts are forecasting a modest decline in sales for this region. Any strength here could help offset weakness elsewhere.
Skincare: As the largest product category, the performance of skincare brands like Estée Lauder, La Mer, and Clinique will heavily influence the overall results. Analysts are predicting a 7% year-over-year decline for this category.
Makeup and Fragrance: These segments are expected to perform slightly better, with a smaller year-over-year decline.
Profit Recovery and Growth Plan (PRGP): Estée Lauder is in the process of implementing its "Profit Recovery and Growth Plan" aimed at improving profitability and restoring sustainable growth. Investors will be looking for commentary on the progress of this plan and its impact on gross margins and operating costs.
Estée Lauder (EL) Price Target
Based on 23 analysts from Tiger Brokers offering 12 month price targets for The Estée Lauder Companies in the last 3 months. The average price target is $82.54 with a high forecast of $110.00 and a low forecast of $56.20. The average price target represents a -9.04% change from the last price of $90.74.
Short-Term Trading Opportunities Post-Earnings
Trading Estée Lauder post-earnings is a high-risk endeavor, but it could offer opportunities.
Historical Performance: The stock has a history of negative one-day returns following earnings announcements, with a median drop of -7.3% over the past five years. This suggests that a negative reaction is a common pattern.
Low Expectations and Potential for a Beat: The current analyst expectations are very low. The company has consistently beaten EPS consensus estimates in recent quarters, which may indicate that the market has already factored in the negative news. A surprise beat on either revenue or EPS, coupled with an optimistic outlook, could trigger a short-term rally.
Forward Guidance is Key: Given the challenging environment, the company's guidance for fiscal 2026 will likely be the biggest driver of the stock's movement. An optimistic outlook or a confident tone from management could outweigh a disappointing Q4 result.
Volatility: The stock is known for its post-earnings volatility. Traders may consider options strategies like a short straddle or strangle if they believe the price move will be significant, regardless of direction. Conversely, a long position could be taken on a positive surprise.
Something to note here, EL trades at a 25% discount to peer L'Oréal even at depressed earnings, suggesting significant re-rating potential. With travel retail now just 13% of sales (down from 30%) and margin expansion already visible, the turnaround appears credible. An options strategy buying Jan 2027 $110 calls and selling $50 puts, this does offers asymmetric upside with limited downside exposure.
Technical Analysis - Exponential Moving Average (EMA)
From what have seen so far, EL share price is currently at a discount, and we can see that it is in a consolidation mode before its earnings, with positive momentum though, judging from the 13F filing, we can see that the market have a low expectations for EL, so any slight improvement across its key metrics could mean we might see a small rally.
So the turnaround potential is there, and it might be worth to take a trade using option as the Put-Call ratio suggest a bullish move post earnings.
Summary
The Estée Lauder Companies (EL) is set to report its Q4 2025 earnings on August 20. The company faces a challenging environment, particularly in its global travel retail and Chinese markets.
Analysts project a steep decline in performance, with a consensus revenue forecast of around $3.4 billion and a meager EPS of just $0.08. Key metrics to watch will be the sales performance in the crucial Asia/Pacific region and the global travel retail business, which has been a major headwind.
Despite the pessimistic outlook, the low expectations could create a trading opportunity. Estée Lauder has a history of beating analyst EPS estimates, and a positive surprise or, more importantly, a more optimistic outlook for fiscal 2026 could trigger a rally. The company's ongoing "Profit Recovery and Growth Plan" and commentary on its progress will also be a key factor in how the market reacts. Trading the stock around the earnings report is high-risk, as it is known for its volatility.
Although Q4 may show further weakness, management anticipates growth resuming in FY2026 as inventory destocking completes. If volumes recover, operating income could more than double from current trough levels of $1.58B back to prior peaks above $3.5B.
Appreciate if you could share your thoughts in the comment section whether you think EL could provide an earnings beat which might be small but enough to create a small rally for its discounted share price.
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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